#11. High-frequency trading

High-frequency trading (HFT) is a form of automated trading characterized by advanced algorithms, near instantaneous execution, and short-term horizons.

In 2000, HFT accounted for less than 10% of total equity trading volume. Today, HFT represents nearly 52% of daily trading volume. However, not everyone is a new market dominated by high frequency traders. On May 6th, 2010, the infamous “flash crash” occurred when $1 trillion of value was obliterated from the market in a single day because of computer-driven sell-off over $4 billion. These abrupt moments of volatility have many proponents calling for the curtailing and even banning of HFT altogether.

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